1992 PLP 833 (CLC)

3. C.M.A. No.1683/88:‑‑Costs. Notice for 2‑1‑1989." MI. 1VI.H. Kazmi, learned counsel appearing for the intervenor raised the following contentions:‑ (1) This Court has no jurisdiction to arrest the ship in rem on the ground that the Court has no jurisdiction to entertain an action in rem in respect of the said ship. (2) Whether vessel is beneficially owned by defendant No.2 ? On the other hand Mr. Ahsan Zahir Rizvi, the learned counsel appearing for defendants Nos.2 and 3 submitted that the Court has jurisdiction. Mr. Ibrahim Pishori, learned counsel appearing for the plaintiffs. submitted that the points may not be decided at this stage. I shall first deal with the question of jurisdiction. The Admiralty jurisdiction of this Court is founded on the Admiralty Jurisdiction of High Courts Ordinance,1980 (Ordinance XLII of 1'980). Subsection (2) of Section 3 of the Ordinance provides, inter alia, the various matters which come within the admiralty jurisdiction of this Court. It provides that:‑ "The Admiralty jurisdiction of the High Court shall be as follows that is to say, jurisdiction to hear and determine any of the following causes, questions or claims." Then. it sets out a list of matters which come within the jurisdiction of this Court from clause (a) to clause (r). Subsection (2) of Section 4 provides that the Admiralty jurisdiction of this Court may in the cases mentioned in Clauses (a) to (d), (i) and (r) of subsection (2) of section 3 be invoked by any action in rem against the ship or property in question. Subsection (4) of section 4 provides that:‑‑ "(4) In the case of any such claim as is mentioned in clauses (e) to (h) and (j) to (q) of subsection (2) of section 3, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of the ship, the Admiralty jurisdiction of the High Court may, whether the claim gives rise to a maritime lien on the ship or not, be invoked by an action in rem against:‑ (a) that ship, if at the time when the action is brought it is beneficially owned as respects majority shares therein by that person; or (b) any other ship which, at the time when action is brought, is beneficially owned as aforesaid." It would be observed that subsection (2) of section 3 gives this Court. Admiralty jurisdiction to try issues that are set out therein and section 4, subsection (4) sets out the circumstances under which the Admiralty jurisdiction in rem of this Court may be invoked to have ships arrested. The learned counsel appearing agree that by virtue of clause (g), subsection (2) of section 3 of the Ordinance, this Court has admiralty jurisdiction to try the plaintiffs claim founded on the Fixture Note. It is Mr. Kazmi's contention, however, that the admiralty jurisdiction in rem of this Court in the present circumstances may not be invoked to arrest m.v. Naran. It is argued that by virtue of section 4, subsection (4), clause (a), the ship liable to be arrested must at the time that the action is brought be a ship the owner or charterer of, or in possession or in control of the vessel which was involved in the subject of the claim when the cause of action arose. The vessel involved in the present case is m.v. Naran of which the defendant No.2 was not the owner or the charterer or a person in possession or control at the time the cause of action arose. There is no dispute that the Admiralty action which was brought before this Court is an action that this Court has jurisdiction to entertain. Nor is there any dispute that the defendant No.2 is the party who would be liable if the plaintiff should succeed in that claim. The question which is to be determined is whether the words `where the person who would be liable on the claim in an action in personam" was, when the cause of action arose, the owner or charterer of, or in possession or in control of the ship in subsection (4) of section 4 means that ship is beneficially owned as respects majority shares therein by that person who is the owner, charterer or in possession or in control of the ship involved in the action or simply beneficially owned by the person who would be liable in the action in personam. The words "who would be liable on the claim in an action in. personam" were considered by William J., in The St. Elefterio Schwarz & Co. (Grain), Ltd. v. St. Elefterio ex Arion (Owners) (1957) 2 AER 374; (1957) Lloyd's Law Reports 283). In that action the plaintiff's transferee's of bills of lading had begum an action against the ship‑owners for damages arising out of the antedating of the bills of lading. In that motion, the defendants moved for an order that the writ be set aside on the ground, among others, that section 3(4) of the Act of 1956 (corresponds to section 4(4) of Ordinance of 1980) was a bar to the proceedings in rem. They contended that the subsection gave a right to succeed in rem only if a liability in personam existed and submitted various reasons, both legal and factual, why they were not liable. The plaintiffs argued that the motion before the Court was not to strike out as disclosing no cause of action but to set aside the writ on the ground that the Court had no jurisdiction in rem and that such a hearing must not develop into the trial of the action. William J., declined to go into the merits of the various contentions in law advanced by the defendants and said at page 376:‑‑ "It seems to me, having regard to the view I take of the construction of S.3(4) of the Act of 1956, that this is not the moment to decide whether the defendants are right or whether they are wrong in their submissions on the points of law raised. If they are right on all or any of these various points advanced, it may well be that in the end they will show a good defence to the action. That, in my judgment, furnishes no good reason for setting these proceedings aside in limine and thereby depriving the plaintiffs of the right to have these issues tried. It has not been suggested that the proceedings are frivolous or vexatious, so as to call for the exercise of the Court's inherent jurisdiction to halt such proceedings in limine. The defendants' argument is founded on the proposition that S.3(4) of the Act of 1956 introduces a new restriction on the right to proceed in rem, and that a plaintiff cannot arrest a ship under that subsection unless he can prove at the outset that he has a cause of action sustainable in law. In my judgment that proposition rests on a misconception of the purpose and meaning of S.3(4). As it appears to me, that subsection, so far from being a restrictive provision, is a subsection introduced for the purpose of enlarging the Admiralty jurisdiction of the Court. Ass I view it, its purpose is to confer for the first time in. England the right to arrest either the ship in respect of which the cause of action is alleged to have arisen or any other ship in the same ownership." The learned Judge continued at page 377 as under:‑ "In my judgment the purpose of the words relied on by counsel for the defendants, that is to say the words, "the person who would be liable on the claim in an action in personam", is to identify the person or persons whose ship or ships may be arrested in relation to this new right (if I may so express it) of arresting a sistership. The words used, it will be observed, are "the person who would be liable" not "the person who is liable" and it seems to me, bearing in mind the purpose of the Act, that the natural construction of those quite simple words,' is, "the person who would be liable on the assumption that the action succeeds." The question has arisen in this case as to when this matter has to be decided. The appropriate time for the matter to be dealt with about who was the person who was the owner of the ship at the time the cause of action arose and whether that person is the person who at the time proceedings begin is the person who beneficially owns all the shares in the ship, clearly can raise very difficult question of facts questions that are not easy to resolve on affidavit evidence particularly where, as in liberty, the matter arises as a question of urgency. But it is clear that this is the appropriate time for the matter to be dealt with. In the St. Merriel Smith's Dock Co., Ltd., v. Owners of the m.v. St. Merriel (1963) 1 AER 537, Hewson, J. observed at page 544:‑ "It seems to me that the purpose of S.3(4) of the Administration of Justice Act, 1956, is, amongst other things, to identify the person or persons whose ships may be arrested, and that such identification is a question of fact. I have had sufficient facts on affidavit in this case to reach a firm decision on that matter, and I ask myself on those facts, first, who would be liable in this case if the action as constituted succeeded? It would be the person who, when the cause of action arose‑‑be .he the owner or the charterer or the person who is in possession or in control of the ship‑‑made the contract for the repair, by the plaintiffs; and on the evidence, as I say, I am satisfied that there was no contract, express or implied, between the owners and the repairers. I am satisfied that there was no liability on the owners when the cause of action arose. I am further satisfied on the second point which it is necessary to decide on this subsection that, when the action was brought, this ship was beneficially owned, as respects all the shares therein, by the owners, the defendants. If the Administration of Justice Act, 1956 had said "beneficially owned" and stopped there, counsel for the defendants admitted that it might have been arguable that it might have embraced the charterers by demise. "Beneficially owned" is not defined in the Act of 1956; and there are circumstances where a ship is owned by one person‑‑that is, true ownership‑‑where that person is the only person with a right to sell and yet where the same ship is beneficially possessed, or beneficially controlled, by some other person, such as in this case, where the ship is under charter by demise. But the words of the Act of 1956 are "as respects all the shares therein", and I conclude that the words are there for some purpose and that that purpose is to indicate the true owner, that is, the only person with a right to sell all the shares. So that, under this section also I find that, when the action was brought, the defendants were the persons who beneficially owned the ship as respects all the shares therein." In the case of Med Way Drydock & Engineering Co., Ltd. v. The Andrea Ursula ((1971) Lloyd's Report 145=(1973) Q.B. 265), Mr. Justice Brandon again had to investigate a matter of this kind. In the case, the Cangreso Del Partido,.(1977) 1 Lloyd's Report 536), Mr. Justice Robert Coff had to decide on submission made to him as to what was the appropriate time. and he came to the conclusion that there had to be at this stage a decision on the matters raised‑‑that it was not right for this issue to be decided as an issue in the action but if the defendant sought to have the writ and the arrest set aside the Court must decide the question of jurisdiction. I entirely accept what is said in these cases that of course the matter must now be decided on this motion. There is no definition 'in the Ordinance of the expression "beneficially owned" as used in section 4(4). It could mean owned by someone who, whether he is the legal owner or not, is in any case the equitable owner. That would cover both the case of a ship the legal and equitable title to which are in one person. Section 4, subsection (4) clearly indicates that a ship wholly owned by a party who would be liable to an admiralty action in personam may be arrested. The defendant No.2 has produced two documents before the Nazir. The plea of the defendant No.2 is that the vessel m.v. Naran wholly owned by the defendant. The present defendant No.2 Messrs Afrah Shipping Company moved an application for impleading them as defendant in that suit was granted by an order dated 21‑11‑1989 and the defendant No.2 were allowed to be joined as a defendant in that suit. Kuwait Flour Mills Company filed appeal against the impugned order. TKis appeal was admitted as Admiralty Appeal No.l of 1990. A Division Bench of this Court comprising of Saleem Akhtar and Imam Ali G. Kazi, JJ. has considered this question in unreported judgment, dated 12‑7‑1990 in Admiralty Appeal No.1 of 1990 in which the learned Judges have come to conclusion after giving cogent reasons that 'in the present case from the documents, it is clear that m.v. Kashmir did not change her name to KALAM or NARAN and prima facie forged bill of sale has been produced. Respondent No.3 (defendant No.2 in the present suit) does not deny that the vessel under arrest had called earlier and when arrested was known as `KASHMIR'. Respondent No.3 has entered the vessel under a fictitious name with intention to defeat the process of law". It was further observed that respondent No.3 could claim interest in the action if it would have succeeded to establish substantial interest in the vessel. It was again observed "From the documents prima facie it does not seem to have any interest." I am bound by the decision. It is pertinent to note that respondent No.3 in the above Admiralty Appeal No.l of 1990 is Afrah Shipping Company who is impleaded as defendant No.2 in the present suit. Mr. Rizvi submitted that defendant No.2 had filed petition for Special Leave to Appeal before the Hon'ble Supreme Court and the leave to appeal was granted on 29‑11‑1990. His submission is that the operation of judgment dated 12‑7‑1990 he suspended. This submission is devoid of force. The defendants were allowed to obtain stay from the Hon'ble Supreme Court but it seems that no efforts were made in this behalf. It is well‑settled that the operation of a judgment/decree/order, passed by a Court is not automatically suspended on the mere filing of appeals or by granting of leave to appeal. This being the position in law, unless the operation of judgment is suspended, the above observations made by the Division Bench are still in the field. I am of the humble view that the persons who have beneficially owned the shares in the NARAN are not the persons who were the owners at the time the cause of action arose. For these reasons, I find that this Court has no jurisdiction to entertain the suit. Accordingly on that ground, I would accede to Mr. Kazmi's request and therefore these proceedings should be set aside. H.B.T./A‑1120/K Order accordingly.